In two posts for The Strategist, Why Australia Should Build Its Own Submarines (part 2 here), I discussed the benefits of building all submarines in Australia, including better management of the cost of ownership through an Australian design environment and avoiding the manpower and facility overheads of establishing production and test facilities overseas.
What about building the first one or two submarines at the overseas designer’s yard? This is described in the Competitive Evaluation Process as a ‘hybrid’ build program. Possible advantages cited by advocates include an earlier delivery from the parent yard’s more experienced workforce and an opportunity to iron out any bugs while there, and the capacity to train the Australian workforce for the submarines to be built in Australia.
This approach risks establishing different supply chains; one in the overseas yard and a second in Australia for the remainder of the submarines built here. Alternatively, to avoid the additional cost of the two supply chain approach, one supply chain delivering to the overseas or Australian building yard.
This is a more complex arrangement and one where a more significant overseas supply chain is likely to remain throughout the life of the submarine. This increased supply chain complexity will result in a reduction in Australian Industry Involvement (AII) and an increase in the cost of ownership.
A return to the days of dependence on an overseas supply chain would revive Australia’s unhappy experience of this in the past; remember the Oberon submarine spare parts drought during the Falklands War.
The way to avoid this situation is to undertake the design phase when key components are defined in Australia, with the intent of achieving a given level of AII. This was done for Collins and ANZAC projects; both exceeded the 70% target. These vessels were engineered, planned and procured from the beginning of the concept studies to be built most efficiently in Australia.
This also avoids a clash between overseas and Australian construction standards governing everything from cabling to lifting rules, etc. Non-conformance can necessitate expensive and time consuming re-work to meet Australian regulations—a problem for the AWD.
An Australian supply chain is important. Supply of components comprises the vast majority of the platform contract value and hull fabrication the remainder, of which the trades’ workforce component is less than half.
As proof of success, today, more than 90% of Collins ASC’s supply chain purchases are spent in Australia. This is a significant lesson to be learned from the Collins project and one that a hybrid option can’t match.
As a result, Australia has a world-class submarine sustainment industry and capability; we should ensure that it’s used to the full for FSM. This opportunity will be denied if we fail to undertake the design definition here or build any of the submarines overseas.
Can we develop the workforce in time? ASC today has a workforce of over 2,600 professional engineers and skilled tradespeople, supported by an active apprenticeship and professional training program. This includes ASC’s nucleus of pressure hull welders used for the recently successful full circumferential hull cut and rejoin of HMAS Farncombe’s pressure hull during the current Full Cycle Docking.
Expanding the workforce and developing the skills and production line facilities for hull forming and welding is a task to be undertaken in parallel with the design process.
Will the overseas build be quicker? Assuming hull diameter and scantlings are the same, the Japanese and French will offer the benefit of an existing production line. However, it’s likely that any overseas build will require some new production/test facilities and workforce.
The manpower bill for an overseas build will be larger; both in cost and dislocation to place engineers, tradesmen, crewmembers and their families in an overseas facility to standby the building and sea acceptance trials of the first one or two submarines. At the same time we would need to set up similar capability in Australia for the follow on submarines. The duplication will compound the cost and risks of this critical phase.
The possibility of firing US ADCAP torpedoes on an overseas test range seems unlikely, delaying problem resolution and acceptance until the submarine returns to Australia.
Will the hybrid allow the inevitable design issues to be resolved more quickly? Often the problems only emerge after the follow on submarine has substantially progressed. At this point in a hybrid build we face the complication of two building sites in action. Finally, modern communications and common CAD/CAM system should allow the full capability of Australian and overseas design houses to be effective.
There were many early design ‘fine tunings’ during the early build stages on HMAS Collins, rectified on the spot, by Kockums working inside ASC, supervising the ASC’s production design. This ensured the smooth transition from design to build, which hasn’t been the case for the AWD project.
The later Collins design shortcomings were only uncovered after extensive sea trials. These were resolved by a team effort involving Defence, DSTO, the USN and Australian industry. Most of the changes fitted were designed and implemented by ASC, and certified by the designer, Kockums. I can’t imagine this would have been possible had the first submarine been built in Sweden.
The Collins and ANZAC projects have demonstrated the value of planning, designing and engineering from the very beginning for procurement, construction and sustainment in Australia—to achieve the best overall value for money and strategic capability, with cost-effective and reliable sustainment in times of peace or conflict.
To avoid duplication exacerbating the manpower load and costs during the critical start up phase of the build, ensure first of class lessons are efficiently incorporated into the Australian build and to minimise the cost of ownership we should initiate the PDS phase with firm direction that all submarines are to be built in Australia, with a specified AII target.